Data Envelopment Analysis

All business operations/processes involve transformation—adding values and changes to materials and turning them into goods and services that customers want Business operation Transformation Performance evaluation and tradeoffs . Managers are often interested in evaluating how efficiently various processes operate with respect to multiple performance measures (or metrics). Organizations are interested in knowing their performance with respect to the use of resources such labor, materials, energy, machines, and other, and the outcomes such as the quality of finished products, services, customer satisfaction. Consider hospital operations, for example. The performance measures or metrics include doctors, nurses, medical supplies, equipment, laboratories, beds, number of patients treated, number of interns and residents trained, and others. In a buyer-seller Buyer-seller supply chain supply chain, the buyer may be interested in comparing the performance of several sellers with respect to response time, costs, flexibility, customer service, quality, and customization. Eliminating or improving inefficient operations decreases the cost and increases productivity Productivity . Performance evaluation and benchmarking help business operations/processes to become more productive and efficient.